The formation of a stable government has resulted in positive sentiments across Indian economy including capital markets - EY
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EMEIA — India market insight The formation of a stable government has resulted in positive sentiments across Indian economy including capital markets “ After the historic mandate to BJP-led NDA, the government’s priority should be to introduce policy related initiatives to revive the economy. The 2019 finance budget will play a crucial role in spelling out the strategic agenda and the key initiatives of the new government and some of that will also be key in the revival of the economy and the IPO market. Sandip Khetan EY India IPO Leader
EMEIA — India IPO market insight
Highlights from the market
► Indian stock exchanges (BSE, NSE and SMEs) ranked 6th in the world in terms
Markets Activity Q2 2019
Change on
of the number of IPOs in Q2 2019. YTD 2019
Change on
prior year Q2 2019 prior year Sectors IPOs Bombay
► In the main markets (NSE and BSE), there were four IPOs in Q2 2019 versus
quarter
by highest number largest by and
seven and five IPOs in Q2 2018 and Q1 2019, respectively. This represents a 34 68% 16 67%
of IPOs proceeds National -
significant drop of 43% as compared to Q2 2018 and a decrease of 20% as
IPOs IPOs main
compared to Q1 2019. market
► A similar trend was witnessed in the SME markets too. There were 12 IPOs in $1.47b 66% $0.49b 68%
Pharmaceuticals
3 IPOs
IPO pricing and
Q2 2019 versus 39 IPOs and 13 IPOs in Q2 2018 and Q1 2019, respectively, Proceeds Proceeds performance
representing a significant drop of 69% as compared to Q2 2018 and a $10m Polycab
decrease of 8% as compared to Q1 2019. $2.5m 0% $4m 72%
India First-day
This may be attributed to the national elections that were held across India median deal size median deal size average return
►
Limited
during this quarter. Investors had adopted “wait and watch” policy, as there
was uncertainty around the outcome of the said elections. Main markets SME markets $194m
► No single sector is active. Sixteen IPOs are spread across different sectors, Q2 2019
Change on
prior year Q2 2019
Change on
prior year Textiles and Base metals 6%
such as base metals, transportation and infrastructure, healthcare and
quarter quarter
apparel
equipment, etc. An entity from the base metals came up with an IPO size of
US$194m. It was the most awaited IPO of Q2 2019.
4 43% 12 69% 2 IPOs
Metropolis
Share price
development
IPOs IPOs $8m
► During Q2 2019, no significant Indian company got listed on foreign stock
Healthcare since IPO
exchanges. $0.46b 67% $0.033b 73% $174m
► Recommendations of the Kotak Committee, which were introduced in last Proceeds Proceeds
Healthcare,
equipment and
32%
year’s reforms in corporate laws, have been implemented effective 1 April
$122m $2m 14%
24% supplies
2019. + or – indicates changes
compared to the offer
► Approximately 70 companies have received clearances from SEBI and median deal size median deal size price of an IPO
approximately 19 companies are currently awaiting clearance. Moreover, Rail Vikas
considering favorable results of the national elections, IPO activities are likely Bombay and National - Main market
Nigam Equity
to gain momentum in second half of 2019. 40 $12,000
Bombay and National Stock Exchange - SME
market
Company index
Limited
$10,000
► The upcoming budget shall be the 1st budget of NDA-2 government and the 30
$8,000
150 $700
$600
BSE
$500
government is expected to roll out reforms to boost the economy. Further, $70m
20 $6,000 100
$400
$4,000 $300
rationalizing the tax rates, thereby leaving more funds with the middle-class,
10 50 $200
Transportation and SENSEX
$2,000 $100
0 $- 0 $0
and also rationalizing the disinvestment process, for e.g., rationale for exit, 2014 2015 2016 2017 YTD 18 Q2 19 2014 2015 2016 2017 YTD 18 Q2 19
infrastructure
application of proceeds, setting realistic disinvestment targets, etc. These Number of IPOs Proceeds US$m Number of IPOs Proceeds US$m
+0.7%
steps may have a positive impact on the capital markets. India
All amounts in table are in US$. + or – indicates change since 1 April 2019
All amounts in table are in US$Ernst & Young Associates LLP
EY | Assurance | Tax | Transactions | Advisory
Sandip Khetan
About EY Partner and National Leader
Financial Accounting Advisory Services (FAAS), EY India
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sandip.khetan@in.ey.com
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